Purcari Wineries Public Company Limited (WINE) Earnings Call Transcript & Summary

Good afternoon, everyone. It seems that investors are still joining the call. I'm welcoming you to our conf call with investors to present you our first half results. And I will leave the floor to Eugeniu Comendant, Chief Operational Officer of Purcari Wineries.

Thank you, [indiscernible]. Good afternoon, everyone. Thank you for joining the call. Indeed, we see that some investors are still connecting the audio, but we can keep on. So yes, welcome to the presentation where we'll present the results -- the financial results of Purcari Wineries plc for the second half (sic) [ first half ] of 2022. Today in the call, there is myself, Eugeniu Comendant, Chief Operating Officer of Purcari Wineries; Victor Arapan, Chief Financial Officer; Eugeniu Baltag, the Investor Relations Manager; and we have Vasile Tofan, Chairman of the Board. The agenda for today is I'll try to go quickly through some slides, which I guess many of you know from previous presentations. I'll cover them quickly. They will cover the overview of the group, our vision, our strategy. Then we'll dive into the actual operational results, and we'll end with having a look at the guidance that we've given out at the -- somewhere earlier in the year, how we perform versus our guidance. And then we'll open the floor for questions and answers, which we hope to be very interactive, and we're welcoming your questions. So just a quick overview of Purcari Wineries plc. We are proud to have one of the wineries being the most awarded wineries in the world. That's Chateau Purcari. In 2021, it became the most awarded winery in the world with 333 medals at most important and notorious wine competitions around the world as well, Purcari is the most awarded winery at Decanter, which we call the "Wine Olympics" between years 2015 and 2021. So obviously, a very awarded winery, and this is important, of course, in the wine business. We continue to be the fastest-growing large winery in the Central and Eastern Europe. You may know that we are the largest exporter of bottled wine from Republic of Moldova, and we now own around close to 1,400 hectares of vineyards. And of course, we are very proud and we are happy to have many of you and also other reputable shareholders as part of our shareholder base. If you were to look at the split in sales, where our revenues come from, 53% of our revenues come from Romania. This is based on the latest results for the first half of this year. 20% of revenue comes from Moldova. This share has increased with Moldova performing very well in the first half of this year, we'll see later in the presentation. Poland now with 10%, China with 5%, Czech Republic and Slovakia with 3%. Ukraine has decreased, obviously, because the sales to Ukraine have pretty much halted. So now it's around 1% share of our sales. And then we have other markets, which account to 8%. Just to reaffirm the statement that our vision being creating the undisputable champion in the wine business in Central and Eastern Europe. Obviously, we need to start, we have our home base, one of the most favorable one. So our home base is for now Romania and Moldova. Of course, also M&A to expand this base -- this regional base. But Romania and Moldova, in fact, account to the most area of vineyards in Southeastern Europe and another 4 in the whole Europe after the big 3, which is Spain, France and Italy. So obviously, we are in the region where we have an abundance of our raw material, which are the grapes. And basically, we can -- we have the ability to grow the business unhindered. We have the 5 brands, Purcari, of course, a notorious one and the premium one. Crama Ceptura is the production and positioned as a national brand in Romania. Bostavan is a mass market value -- playing in the value segment. Domeniile Cuza is a new brand launched now getting the traction in Romania, but perhaps looking at launching it in other markets. And Bardar, the brandy brand production in Moldova, but also now becoming very popular not only in Moldova, but also other markets. Now, a good snapshot. I think it's an interesting chart. You can see a bit of our track record starting from 2017 from top line all the way to net profit and the earnings per share. Obviously, you know we've IPO-ed on the Bucharest Stock Exchange in February 2018. And since then, we managed as a business to increase revenues by 75% while maintaining the same strong margins because, for example, in 2017, we had a 20% margin from a revenue base of RON 142 million and now the end of 2021, we've posted RON 248 million in revenue and with the same pretty much net profit margin of 21%. So obviously, a good track record. We're also -- it's important for us as a company to provide value to our investors not only through, let's say, the business growth, the financial growth that we can generate in the business but also making sure that we are disciplined in paying out dividends. So I can imagine that for an investor, dividend is important. You need to create value in this way. So we've been relatively -- we've been actually good at paying out dividends on time. We halted a dividend payout was at the dawn of the COVID pandemic. We all would agree that we had to sit on cash just to make sure that we go through what was -- what seemed to be a period of uncertainty with a strong balance sheet. Now this is our model -- business model. It's a -- I think it's -- again, if you're familiar with this presentation, it's a well-covered model. But at the core of it is being able to provide our consumers with what we call affordable luxury, so high value and very high-quality wines for affordable prices. And we'll see, in fact, we'll see how we do this. And later, we have a slide on this. I mentioned that our vision is to become the undisputable wine champion in Central and Eastern Europe. And that, of course, has also a connotation or a component of M&A. So we want to act as a consolidator of a relatively fragmented industry. And of course, we have strong values that we believe define us, and we will define the way we will achieve this vision [indiscernible] ourselves. We see that we are able to create strong sales from margins. We have from the [ listed ] wine companies, we have one of the, if not the highest EBITDA margin. And that comes with the ability to, on one hand, to price relatively high. And that comes from the high quality of our wines, creating meaningful campaigns that create a higher brand equity and a strong brand perception among consumers. And on the other hand, being diligent and disciplined when it comes to cost, using scale to our advantage and basically be able to price high with a low cost and generate strong margins. And that's what our business is and what we can do. I mentioned the M&A component. Here, you can see indeed why the industry is quite fragmented. If you see -- if you take the combined market share of -- category share of the top 3 players, now of course, we understand wine is a bit of a different business from a pressure perspective from beer and spirits. It has the augmented product and the perception towards the customer is different. But nonetheless, obviously, the wine industry gives ground to M&A opportunities. We are proud to join this. Not only are we able to grow volumes and grow the business, but also we are able to maintain that high quality towards customers or high quality of our wines towards customers, we do have. When we say this promise every time a customer picks up a wine from Purcari, there's a promise that we need to keep that high quality, and we're able to do that. In fact, we're actually not only increasing volumes but also increasing the number of medals and awards that we receive around the world for our wines. Of course, on one side is the experts that give us those medals and awards. On the other hand, we do want to hear from the consumer as well. And from the consumers, we want to hear on 2 sides. On one side, we want to hear what they think of our quality. And here on the right side of this chart, you see that Purcari scores extremely well on Vivino. This year alone, so in the first half, we amounted over 70,000 scores. And out of 5 -- we score at 4.1 out of 5, which is extremely high score for Vivino. So this is where consumers score our quality. And on the left, consumers in a way to score our brand perception and brand equity where we see that in Instagram, the Purcari brand leads the number of mentions when compared to other wine competitors in this case for the Romanian market. So not only we are a quality brand or quality wines, but we're also a cool brand that consumers associate with. Continuing to speak about Vivino, as you can see here, we dominate the top 25 wines within the premium segment. But we can even say that we dominate the top 15 because 10 out of 15 -- top 15 are Purcari wines. So obviously, we dominate the quality segment. And we like to look at this chart because we can also see where our wines get scanned and, of course, consumed. And you can see that our wines reach, I think it was 96 countries we can see here in the stats. So overall, very good performance on Vivino. Now moving on to the operational results. This is sort of a high-level chart. You can see that our revenues increased by 16% versus the same period of last year. This is, of course, we see this as a good result. Worth to mention that in this 16%, it's also included the consolidation of Ecosmart. And we'll try to -- in our presentations and also in the financial statements, we are trying to show the information on Ecosmart because we understand that for you also in your models and your analysis, it's -- you would want to see the apples for apples. So compare, let's say, the business without Ecosmart and the business with Ecosmart. But in this case, 16% includes also the Ecosmart. Overall, when comparing to the first half of 2020, revenues have grown 46%. Of course, we know that in the first half of 2020 was this dip in performance because of the beginning of the pandemic. But nonetheless, we show that we were able to keep a strong directional growth even in times of adversity. EBITDA up 10% with a [indiscernible] net profit up [indiscernible] with a net profit margin of 17%. Again, this includes Ecosmart and some other one-offs, which I'll cover maybe quickly in the slides later on or we can discuss in the Q&A. So a bit on the key operational results. So firstly, of course, we are happy to show increase in sales despite the current turmoil in the region. We see a strong performance in various markets. So Romania is growing. Moldova is growing. Poland is growing again. And also, we see brands growing. So Purcari growing was around flat. Bardar and Crama Ceptura growing. So overall, we see a healthy growth. We also see China, I would say, recovering still, but now when compared to the same period last year, showing 30% growth, which is encouraging. And of course, we're doing all this despite the drop in sales in Ukraine and in fact, also Belarus where we were selling bulk brands in Belarus. Now we are managing to maintain margins. So here, we see margins and despite these inflationary pressures. Indeed, we have certain inflationary pressure, cost inflation. But overall, we are managing to some extent pass these on to the market and also to control the cost pressure that's coming from [indiscernible], so to speak. We are busy with our CapEx investments. So we invested. We -- in fact, recently, we were -- we've inaugurated the irrigation system at Purcari. This is an important milestone. This is -- this will be the first technical vineyard or wine-producing vineyard in Moldova that would be irrigated, and this is a great milestone. And for us, it's a milestone because -- and it's an important milestone because it will provide for our grapes one of our most important assets in the [indiscernible] 2020, 2021, the drought has been 2020 worse, 2021 still there. And in the future, we want to be protected from that. But also, in fact, you need to know that having irrigation also gives the control over quality because we have a constant yield, so we'll be able to have just sweet spot of a yield for a vineyard. And in fact, the quality we are expecting to -- I wouldn't say to go up, but we'll be able to control the quality of our grapes. We've started the use, so we've also inaugurated, so to speak, the warehouse at Crama Ceptura, where we can house, we can store around 1 million bottles. This is important because it helps our logistics, including most of -- for Western Europe. And more on the sustainability side, but also on the cost efficiency side, we've installed solar panels on one of the roofs on the Purcari production facilities. The capacity is around 200 kilowatts, and this covers about 15% of the annual electricity consumption at Chateau Purcari. And in the future, in fact, we're looking to keep installing these solar panels at Purcari, but also other production facilities because it is a lucrative investment with a relatively short breakeven. And at Purcari, we're looking maybe to reach around 80% of the coverage of our electricity cost in some few years from now. And of course, we are very busy, the whole team working on the growth of Purcari, launching new products in new markets and grow the business. But also we are not taking our eye off other activities that bring value to our investors. As you know, the RON 0.51 dividend per share earlier this year, and it will be paid out very soon on the 8th of September. We maintained our liquidity -- the liquidity of the Purcari stock. This means that we maintain our position or presence in the FTSE Global Micro Cap Index. And as you'll see later in the presentation, we're still highly liquid -- relative liquid company. We're the second most relatively liquid company in the Bucharest stock exchange. We are participating actively in different investor events because there's a demand -- generating demand for our wines among consumers, but also we believe that also we need to be actively in generating demand for the Bucharest stock among investors. So we need to make sure that we stay relevant to you as existing investors. And that's also being present at these events, having the opportunities to dig into certain issues and maybe strategy with you, but also to be present and show ourselves in front of potential other investors don't -- hopefully generate demand for our stock and drive the share price up in the future. And last but not least, we are organizing the Purcari Investor Day at Chateau Purcari on September 30. And I hope all of you have received the invitations. And I think that we sent out, yes, and we hope to see you -- many of you that are here in this call to also see you live at Chateau Purcari on the September 30. So in these presentations, we covered the financials a few times, but that's fine. I think it's better more than less. So again, revenue for the first half of 2022 are now at RON 123.9 million. As mentioned, RON 8.9 million -- so RON 8.9 million of this is Ecosmart. So if you imagine that without Ecosmart, the revenue for the rest of the business or the business was before the acquisition of this majority is taken, Ecosmart will be RON 115 million. That will be a growth of around 8% versus the same period last year. But with Ecosmart, this growth represents 16%. On the cost side, 23% increase. A few effects here, of course, is the cost inflation. We have a double-digit growth cost or different components of our cost of sales or cost goods sold. But overall, it's -- we see that this is -- of course, it's not something that no company want this, but we see that we are able to manage this. We've also passed some of the price increases to the market, and we'll see that a bit. There's also another effect here of the -- because in the recent months, the Moldovan leu has appreciated versus the RON, and we incur a lot of our costs in Moldovan leu. This also has an effect in this as a component of the cost of goods sold. And of course, the consolidation of Ecosmart, which is a lower gross margin business, has that effect in there. But overall, we're still looking at a healthy gross margin of 47%. We managed to maintain the strong gross margin with, as I mentioned, price increases, but also we are looking at how we managed our sales mix. And in fact, you'll see in a bit that -- for example, we have a market in the Czech Republic and Slovakia, where sales has slightly decreased. But that's also because of our prioritization of margins versus just volumes. But that being a lower margin market for us is decreasing total share of sales or share on total sales leads to this mathematical increase in margin. Overall, we are happy with the margin that we've been able to maintain. When it comes to G&A, here, you see the marketing and selling flat. The G&A have gone up by 11%. There's a few components here for this -- for the what has driven up the G&A. One of them, in fact, again, comes from Ecosmart, which are some professional fees that are -- that as you know, we have some legal cases pending there, but we are very confident in how they'll end. But nonetheless, there are some legal costs that are entering in this component for the cost of G&A. And there's also depreciation that went up with the fact that we've started -- we rolled out some of the CapEx investment that we've done in the previous periods. So if we look at this other income or expenses, you see a delta of RON 2.6 million. We have a negative impact in the first half of 2022 by RON 1.5 million. And it was a positive income -- a positive impact last year by RON 1.1 million, so this delta of RON 2.6 million has a few components. One of the larger points, again, it's impairment loss on trade and loan receivables, which is a combination of some Ecosmart provisions for bad debt, and also Ukraine -- some provision for bad debt in Ukraine. Overall, again, we are relatively confident that we'll be able to reverse these provisions. But management -- we here as management, we always prefer to be more prudent. And usually, we do 100% provisions on these kind of items. Then moving on to EBITDA. So we see here a 10% increase and a 31% margin for the first half, which is just solid. Net profit, RON 20.9 million. Again, impact from Ecosmart is around RON 1 million. So if you were to remove that and then some other bad debt provisions, then the net profit would have been a bit higher. And probably our net profit margin still remained around 90% as we were in the first half of last year. So overall, solid as we see solid figures and solid margins. Talking about solid, we see also that we have a solid balance sheet. You see here that the cash position now is 23 -- at the 30th of June 2022 is RON 23.8 million. Okay, over the -- from the end of last year and then the first quarter to the end of the first half, the cash position has gone down. But that, of course, is due to the fact that we've been very busy in implementing some of the CapEx investments earlier this year. And of course, we also now need to have the cash to pay out the dividend of RON 20.4 million on the 8th of September. Current ratio is healthy 1.33x. This means that we are covering our current debt comfortably. The cash ratio is at 0.16x. Nonetheless, we're extending some of our loan debt arrangements with banks to be able to cover current liabilities if necessary. But overall, we are still solid cash ratio. And debt-to-equity ratio and net debt to last 12 months EBITDA, we see them solid. 40% debt-to-equity and 0.82x net debt to last 12 months EBITDA, way below -- comfortably below the 1.5x ratio that we have as internal limit or internal benchmark. Quickly about the market. So Romania is now 53% of sales plus 7% versus the same period last year. Crama Ceptura is showing single-digit growth. Purcari showing single-digit growth. What was good to see is that Bardar is accelerating, and now Bardar sales in Romania become more and more and more relevant to our overall sales. So that's very positive to see. Moldova overall very strong growth, at 20% share of sales and 44% growth versus last year. All brands, in fact, are performing very well in Moldova. Poland, showing 10% growth and 10% share of sales. Here, we were able to both increase prices, but also making sure that this does not generate a decrease in sales. So obviously, with increased prices, we have maintained strong margins there despite the cost inflation pressure. Asia showing promising the growth, so 30% versus last year. Czech Republic and Slovakia, we see this 19% decrease in sales. And that comes on the background of [indiscernible] and also us pushing price increases forward to the market. And in fact, Czech Republic quite, I guess, with a high sensitivity -- high price sensitivity for -- high demand sensitivity for price. And also, there seems to be a relatively high inflation and a difficult economic environment that also led to this decrease in sales. Ukraine, as obvious, we -- why the decrease of 71%. And then with rest of the world, well, in rest of the world, we [indiscernible] here in Baltic states. They're also showing a bit of decrease. We understand that there's also -- in both states, there's a bit of uncertainty and this sentiment of worry among our consumers because of this war in Ukraine and the conflict that the Baltic states are now more and more conflict with Russia. But if we were to exclude the Baltic states from this rest of the world, in fact, we see over 20% growth in other markets. So important here to mention that indeed we are pushing heavily to grow in other markets such as U.S., such as U.K., Western Europe, Northern Nordics. And in fact, we're also looking at Africa, which I've mentioned this before. Of course, there's nothing very tangible yet, but the teams are working great. We see potential, and hopefully, we'll generate some new pillar for growth in that region. So here quickly on the brands, Purcari 9% because Purcari just it's a strong brand that goes pretty much across all markets. Bostavan, minus 1%. There's a bit of a compensation from the decrease that Bostavan experienced in Czech Republic, Slovakia and the Baltics with Moldova being very strong. Crama Ceptura plus 6%, and Bardar, a very strong plus 25% in both -- and in Moldova and in Romania. So despite the loss of the box sales to Belarus, Bardar is showing strong 25%. Now of course, besides just pure financials, we are also we stayed relevant as a brand. Of course, our support to the Ukrainian refugees was totally unconditional. We knew from the 24th of February that we as a leading company in the region, we had to step in and be involved in supporting the fleeing Ukraine refugees, the ones who are fleeing from this war, especially Chateau Purcari being close to the border with Ukraine. And not just but our efforts, but the international media has picked up on this, and we've gotten quite a bit of coverage. We -- Purcari was featured on BBC, on CNN twice with Anderson Cooper first time and the second time with Richard Quest, many articles in leading media publications such as Deutsche Welle, Washington Post, The Buyer, which is a distributor -- magazine for distributors and even Bloomberg. So overall, there was a positive coverage for Purcari in central media. And then, of course, we are also present in -- we have to continue with our marketing efforts, of course. We have a business to run. So we launched Domeniile Cuza where we are accelerating our communication with Domeniile Cuza, especially now on the back of some medals won in respectable competition such as Decanter. And Wine Crime is various wine brand that has been adopted by the consumer. So it's growing, and we keep pushing that. There's been a feature of Crama Ceptura at a popular show in Romania, MasterChef. And of course, Rosé de Purcari, we had to boast about the fact that it won Grand Gold [indiscernible]. And of course, it's for what we believe for our consumers, but also for our investors, it's important to see that we also do efforts in the direction of sustainability. And here, we see the -- in fact, this is a picture of the solar panels on one of the buildings in Purcari. Now I think I mentioned that I'll show how we, in fact, were able to give high quality to consumer as well. The price is relatively low. Negru de Purcari, which is our flagship wine, Negru de Purcari 2019 made it to the list of top 100 classic wines as per Decanter. Decanter was being the leading magazine in the wine world. This is an incredible achievement. I mean, think about top 100 wines in the world. And here, we are -- Negru de Purcari is among these heavyweights of the wine industry, heavyweights from a brand awareness, but also from a price perspective. And you can see that our Negru de Purcari, which is retailing at around GBP 26 is relatively quite strongly below the prices of other wines that are in the same top 100 list. So we've shown this kind of chart before. We've seen this before with Chateau Negru de Purcari that won platinum and 7 points at Decanter and was retailing at around GBP 12 [indiscernible] Purcari and other wines. Overall, again, it shows our ability to provide this affordable luxury to consumers. And that obviously supports the growth of Purcari brand across the world. On the stock side, we continue to be a liquid stock. So in relative terms, Purcari is the second most liquid listed company on the Bucharest Stock Exchange. So we continue working with our market makers to support this liquidity. And if we look at the price-to-earnings ratio with our peers in the wine industry, we see ourselves relatively low -- so our stock is relatively low priced with a price-to-earnings ratio of 7.7. Now we know that a big component or maybe a big penalty was awarded by investors due to the war that's happening in Ukraine. We saw that on the 24th of February, our stock almost halved, the price of our stock almost halved. And we are hoping and confident that as the war -- we believe that will end, of course, the peace will always prevail that this component of the risk aversity towards the war in Ukraine will be moved. And the price of our shares will return to what they were before the war, of course, with other components of our growth incorporated in that. Same comparison when we look at other companies at the Bucharest Stock Exchange. Again, we are on the side of the lower-priced companies. And this is a nice chart to show that not only we have a low price-to-earnings ratio currently, but usually a higher price-to-earnings ratio should include a component of growth, where a company shows strong growth track record of growth. And we've done that. So if you were to compound the CAGR between the years of '16 to '21, where we show a CAGR of almost 25% growth versus the price in Moscow, you see that we are a bit of an outlier. We are based on our growth, the price-to-earnings multiple perhaps is a bit of a loss. Okay. So now going to the guidance. Just to recap, we've issued the guidance earlier this year, where we -- the guidance is 15% to 20% growth as a -- from a group perspective, which includes also the waste management business, 10% to 15% growth for the wine business so that means without that waste management business. Then EBITDA margin, we've given the guidance of amount of 20% to 25%. And net income margin, we've given the guidance of 10% to 15%. Now so far, we are in line with our revenue growth guidance for the top line. We are slightly below the revenue guidance when it comes to our wine business, but here is worth to mention that we see relatively strong numbers in July and early August. So we're still confident that we'll gain -- so we're maintaining basically the guidances for revenue growth over the group and the wine business. So we believe that will be within this by the end of the year. We are beating so far the margins with the guidance for the EBITDA margin. And we are beating so far the guidance for the net income margin. Nonetheless, we are maintaining these margins for the rest of the year. There's still some uncertainties ahead, but we see this inflation is happening. The cost of capital is increasing. So the interest rates are going up. There's an uncertainty with the war. So we prefer to stay prudent always under -- with the principle of underpromise and overdeliver. Of course, there's a base to the guidance that we're giving, but we can say that we'll always try to beat even the guidance that we've given. So this has been so far the presentation. I want to thank you for your attention, and let's open the floor for questions.

This is Iuliana from Wood & Company. I have a couple of questions.

No problem.

Regarding the gross margin, we are seeing quite some volatility in terms of gross margin if we look per quarter, not necessarily for the first half. I mean, gross margin in the first quarter was very high, above 50%. And it dropped significantly in the second quarter. What is driving the volatility in gross margin? And a second question, on the sales outlook, where do you see the growth coming from? I mean, Romania has not been particularly strong so far. On the other hand, we've seen very high growth in Moldova and Asia. Where do you see the growth in the second half? And if you could give us your long-term expectations for sales growth as well, that would be very helpful. And if you could update us on the buyback program because you have a buyback program approved, if anything is happening with that?

Yes. Thanks. So on the gross margin volatility, the impact on the gross margin for the second half, which was -- second half was around 43%, 43.5% was because we have -- one component was the sales of wines that have the wine from the harvest of last year in 2021. So 2021, the cost of the grapes was relatively higher versus, let's say, a normal course of business. And because of that, there was an impact on the margins. So 2021 and also 2022 -- sorry, 2021 and also 2020. So if you remember, 2020, we have a relatively strong drought in the region and also Moldova and Romania but from Moldova. But then in 2021, we had a relatively higher cost of grapes from third parties. And as you know, we are, let's say, around 50-50 or maybe 1/3 our grapes, 2/3 third-party grapes depending on our harvest. And because of this cost, the -- now that we are -- in the second quarter, we started selling the wines that were produced with the harvest of 2021. We are seeing an impact on the gross margin. So that's on the gross margin. Somewhere though, we've seen these effects, I would almost say, every second quarter of the year because there's always -- I'm looking at the quarters of all the previous years. And always in the second quarter, we had a bit of an impact. So usually, I guess, the way it works, we have this negative effect and then we work with the market. We're pushing price increases for us and then we normalize the gross margin. But first, we have this effect in the second quarter. So that's when it comes to gross margin volatility. When it comes to the sales outlook, now of course, we have large markets in Romania, we have Moldova, Poland, China. An increase -- a percentage increase in these markets, of course, will contribute to a higher percentage increase in overall sales. But for us, it's also important to generate, so to say, new pillars for growth. So the teams are heavily working, heavily involved in creating momentum in sales in -- for example, the U.K., in the Netherlands, in the Nordics. We have just recently won relatively large shipment to the United States. So we are -- growth in Romania, of course, will still be important. And by all means, please still see that there's room for growth in Romania. We have around 11% market share. So there's still room to grow. We've launched now Domeniile Cuza, which is a new pillar for growth as a new brand because as Purcari is moving up in the segment, we are coming from behind Domeniile Cuza to cover the -- some price segment that perhaps Purcari may leave behind. But also Bardar is performing very well in Romania. So Romania still has some space to grow for some years ahead. If you look in Poland, Purcari has doubled in sales versus -- nearly doubled in sales versus last year. So Purcari in Poland is picking up. So overall, there are many -- it's difficult to say that there will be one market or one brand and market that will crease the most of the revenue. Growth for us is the efforts to make sure that it happens everywhere. So keep growing the existing large markets where we operate, but make sure that we also plant the seeds and we create new pillars of growth that will ensure that we can sustain and accelerate growth with new markets. So not the most -- maybe not a specific answer, but you can expect that this would be the answer. Our efforts go everywhere. Then in long term, overall, we are looking at, roughly speaking, if I were to say a figure, we're looking to continue growing our business at double digits for the long term. So be it at around 20%, maybe under 20%, but definitely above 15%. So this is where we're looking to keep growing in the future. Of course, this is organic growth. So we are not including here M&A, which I'm sure there will be perhaps a question on M&A, but we're also busy on that front as well. And the on the buyback, at the moment, we have not -- we're not considering the buyback yet because we are looking at capital allocation. And since we have certain projects ahead, we want to make sure that we don't borrow, extend our credit lines just to do the buyback. So at the moment -- so, so far, there's no specific decision on the buyback even though it has been a topic internally. But it's been parked for the moment. So as we speak, there's no decision on performing a buyback.

And I asked about the sales outlook, but also on the margin outlook longer term, where should it be because margins for this year are substantially below -- what you've included in the outlook is substantially below the previous years. I mean, this year, we do see the impact of 2020, 2021 vintage, but you're also seeing very high inflationary pressures. What about next year? What do you think will happen then?

Well, look, our aim is to maintain the current business model, so to speak. So we'll look at maintaining gross margins in the [ siege ] of 50%, maybe slightly under.

And the EBITDA?

An EBITDA 30%, maybe slightly over. So around 30% EBITDA. This is the...

Even with Ecosmart? Is that possible after the Ecosmart?

Well, Ecosmart, we -- in fact, we foresee that this can become a quite lucrative business. For us, now it's important to clear -- and in fact, we're done with clearing the company. Now we are looking at how do we set up the management and how we set the company to write on course and to be independent that doesn't involve the Romanian team's involvement as much. But yes, Ecosmart, of course, will have a slight negative impact on the EBITDA. But it's actually not such a bad business. What you see how this...

But the target you mentioned, 30%, would that include Ecosmart?

That's a good question. So it depends on how large Ecosmart becomes in our business. I think the -- let me make it, let's say, more clear. The indications that I've given for margins, this would be valid for the wine business for the business except Ecosmart because with Ecosmart, it will depend on how we can turn around or what kind of business we can create from Ecosmart in terms of the margins that it can generate and then how quickly we can accelerate growth in that business. And then the bigger it becomes, the more share it has in our total sales and the impact the margins on the overall group.

Would you consider segment reporting for Ecosmart?

In fact, we were considering in general to bring it to a level or to a state where Ecosmart is independent business, it's cleaned up. It creates its revenue and net profit and then to -- we consider to even diminish our stake in Ecosmart to under 50%, so we don't have to consolidate because we understand you see this is exactly the issue that we have in Ecosmart. It create discussions like this where it makes even difficult for us to give clear indications where will the total group figures be in the future. And so it creates this dilution of a message when it comes to what we are as a group -- as a wine group, a dilution of the message that we are there to provide high growth and high EBITDA margins, net profit margins. So we will consider even to reduce our stake in Ecosmart to not have to consolidate and have this discussion more clear. And I think Vasile, maybe he also wants to add some.

Yes. No, thank you Eugeniu for [indiscernible] this on Iuliana. On Ecosmart you understand, so on this transaction, we had to step in because for us, it's very -- it was very important to clean the business. And it was also part of our commitment, but we don't see ourselves long term in this business. It's [indiscernible] business, so just for you to understand the simple numbers, it's a business that can operate on 30% gross margin. And the SG&A are relatively modest. So we're talking about G&A very low single-digit million RON. So at scale, this business can do an EBITDA margin in the 20s still. So even with Ecosmart, it's not that our, say, group margins are going to be that [indiscernible]. And I'll remind you, at peak, Ecosmart has been doing up to RON 80 million of sales. And at the moment, Ecosmart is value [indiscernible] today at 0 in -- as part of our company. We believe there's tremendous value there after we have cleaned this business tremendous value today. We're bringing in new customers on a constant basis using the [indiscernible] Purcari as a trusted partner. And I think this can be one of the most successful investments we have done. And at scale, I think we have to -- my view is either we have to indeed, as Eugeniu said, we have to either decrease our stake to below 50% so that we don't consolidate it, and ideally spin it off and distribute the proceeds to our shareholders. And I think it's the same as we did with the glass business last year. So I hope we'll get there not too far away from now.

Low single-digit million RON per year, I guess, right?

Yes, yes, in terms of SG&A. This is just for your calculation that this can be -- you shouldn't get the impression that Ecosmart is a single-digit EBITDA margin business. At scale, this is...

And if I may add, so in the figures that we present today, so the contribution of Ecosmart to the net profit was negative. But this was due to certain one-offs, the litigation that we have and some impairment loss on receivable. If those were not there, Ecosmart would have already -- this report would have shown a positive contribution to the net products.

My name is [ Daniela ] from [indiscernible]. I have a couple of questions too. The first one is regarding dividends. Can you please say if the company will maintain 50% or above payout ratio for the next 5 years?

So [ Daniela ], yes, thanks for the question. It just gives me an opportunity to restate and reaffirm that we want to maintain -- so we have a policy of paying out dividend of up to 50% of retained earnings. And we want to maintain that dividend payout. Again, it's important for us to stay relevant and an important company, the portfolio of the -- of our investors, we want to maintain paying our dividends. So the short answer is yes, we will maintain to the highest extent possible with payout of dividends of up to 50% of the retained earnings.

And okay, it is up to 50%, but the lower base is 40%, right?

No. So we'll have to -- usually the way we analyze, of course, we look at the policy, it was up to 50%. Then we look at our cash position and the CapEx investment and other requirements for cash. We look at our base lines. We look at what kind of dividend to create significant dividend yields to our investors. So in all of this, we arrived to a figure, but usually, it's somewhere between 40% and 50%.

Okay. The next question is regarding the CapEx. In the previous call, it was mentioned that beginning with 2023, the CapEx will be RON 5 million. Is this guidance valid for the next 5 years?

Well, this is the maintenance. This is -- the RON 5 million is sort of the maintenance CapEx that we see for the business to just keep continuing. If we have projects -- of course, if we have lucrative projects where CapEx investments are required, of course, we'll analyze and not to increase this figure. But when we speak about the maintenance, so something as a baseline, the baseline figure is around RON 5 million CapEx.

But we have detailed CapEx regarding that CapEx means as a percent of revenues.

So you're asking if we have some sort of internal guidance as the CapEx of revenue?

Yes.

Not necessarily. Not necessarily, the way we more look at it, we're looking from an ROI perspective. So we invest for a total investment. We're looking at the breakeven and we're looking at the -- what is the return on the investment of that CapEx. Of course, we always have to consider this allocation of capital. So there's some things that we can do with capital. One is we can pay our dividends. We can invest in markets and products. We can -- or we can invest in increasing our capacities and increasing our quality. So wherever we see that is more -- the capital invested gives a more lucrative return on this investment, that's where we will decide to allocate.

Okay. And regarding increase in interest rate in Moldova, how do you evaluate this impact for the following period for the company?